- Report says Alibaba Cloud’s market share exceeds the combined total of the next three largest providers
- Research firm says China’s AI cloud market is entering the “Agentic Cloud” era as token-based computing reshapes infrastructure demand
Alibaba Cloud has strengthened its lead in China’s fast-growing AI cloud market, capturing a 40.1% market share in 2025—more than the combined share of the next three largest providers, according to a report released by Frost & Sullivan.
The report, titled Ready-to-Use AI Cloud Services: China’s Full-Stack AI Cloud Services Market Report 2025, estimates China’s combined AI infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and model-as-a-service (MaaS) market reached 59.59 billion yuan ($8.77 billion) in 2025.
Alibaba Cloud generated 23.9 billion yuan in revenue across the three segments, well ahead of rivals.
Baidu AI Cloud ranked second with a 16.6% share, followed by ByteDance’s Volcengine at 13.4% and SenseTime at 7.1%.
End-to-end capabilities
Frost & Sullivan attributed Alibaba Cloud’s leadership to its end-to-end capabilities spanning AI infrastructure, development platforms and foundation model services.
The report said China’s AI cloud market is undergoing a structural shift as large language model adoption accelerates across industries including finance, healthcare and manufacturing.
Daily AI token consumption in China has surpassed 140 trillion tokens in 2026, representing more than 1,000-fold growth over the past two years, according to the report.
That surge is changing how computing resources are measured and priced, with token consumption replacing GPU hours as the key metric for AI workloads.
‘Agentic Cloud’ era
The report also argues the industry has entered the “Agentic Cloud” era, in which cloud providers increasingly compete on integrated AI capabilities rather than raw computing resources.
Alibaba Cloud was cited as an example of this trend, with investments spanning AI chips, cloud infrastructure, foundation models and inference platforms.
The report noted the company has also begun transforming cloud services into AI agent-ready capabilities through standardized skills, Model Context Protocol (MCP) interfaces and command-line integration, enabling autonomous AI agents to directly invoke cloud services.
According to Frost & Sullivan, the primary consumers of cloud computing are gradually shifting from human users to AI agents, marking a new phase in the evolution of AI cloud services and digital infrastructure.
